The Reserve Bank of India’s embargo on Mapusa Urban Cooperative Bank (MUCB) has caught thousands of depositors off guard, even as subtle politics of big bucks continues to play in the background. And while there is uncertainty over the course the bank will take with even the management remaining clueless, there is faint optimism that people’s monies will not be lost.
The RBI embargo will virtually cripple the functioning of MUCB, a bank which boosts of 24 branches across the State besides one extension counter. It has been restrained from advancing any new loans or lending money and what is even worse is that the bank is debarred from accepting fresh deposits. The RBI has been red-carded for its negative CRR (Cash-Reserve Ratio) and penalised under the provision of Banking Regulation Act 1949 for violations on payment of interests on term deposits, borrower exposure limits, grant of unsecured loans and a host of other irregularities. While all these anomalies have gone against the bank, the family raj at MUCB, just like in mainstream politics, has come in sharp focus.
On the flip side, there are thousands of people, including the common man and the merchants who are banking with MUCB. There are ordinary citizens and senior citizens who get their monthly doles deposited in the bank from government’s social schemes, and there are several others whose salaries are being credited every month. The embargo, even if it means a short-term one, will deal a telling blow to the people since the festive season in around the corner.
The State government should keep aside the politics and work out a broad framework to bail out the bank in the interest of the people of Goa and the cooperative sector. Experts can be roped in from financial and legal fields to study the case threadbare while also probing any case of misappropriation of funds.
Established in 1965, the MUCB, North Goa’s first urban cooperative bank first faced a panic situation in 2002 when depositors rushed to pull out their deposits after Laxmikant Parsekar made a mention about bank’s finances on the floor of the Legislative Assembly.
Bringing down MUCB will not only deal a deathly blow to the cooperative bank sector, which is already reeling under an acute financial crunch, but will also dent the confidence of depositors and investors. Mapusa Urban Cooperative Bank’s tumultuous phase comes close on the heels of the turbulence faced by two other major cooperative banks“ the Goa Urban Cooperative Bank and the Goa State Cooperative Bank.
The coming together of cooperative banks and societies is not practical in the current scenario. The idea of merger, amalgamation, acquisition or collaboration with other cooperative banks is a remote short-term possibility. The MUCB management should have a plan-B in place to mobilise the necessary funds to bail itself out. A case should be made for one-time settlement of defaulters while also pushing for monetisation of properties of defaulters which are now worth crores of rupees.
